Mannatech Fires Grant Thornton

Faced with an ultimatum to get rid of either its chairman or its independent auditor, the company chooses the latter.
Stephen TaubOctober 19, 2007

Mannatech Inc. has severed its relationship with Grant Thornton after the accounting firm told it to either remove chairman Sam Caster from all responsibilities or find another auditor. The company hired BDO Seidman as a replacement, effective October 18.

Caster, who founded the dietary-supplements maker, had voluntarily given up his position as CEO prior to receiving Grant Thornton’s request, the company stated in a regulatory filing.

Mannatech noted that its audit committee approved the decision to change accountants, and assured that the change in accounting firms will not delay the filing of reports with the Securities and Exchange Commission. No other details about the auditor change were provided, and the company did not immediately return a call. Grant Thornton declined to comment.

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In a succinct letter to the SEC, Grant Thornton acknowledged that it had demanded Caster’s removal. It also agreed with Mannatech’s assertion in its SEC filing that for the past two fiscal years, Grant Thornton did not render any adverse opinion or disclaimer of opinion about the company.

Mannatech’s filing said there were no disagreements with Grant Thornton on any matter of accounting principles or practices, financial-statement disclosure, or auditing scope or procedures. About that, Grant Thornton wrote: “We have no basis to agree or disagree.”

Mannatech is no stranger to controversy. In August, Raymond Gebauer, a top independent sales associate, was convicted of tax-evasion charges. He was one of about 10 Mannatech associates — independent contractors — who were known as “platinum presidentials” because of the high sales they generated through lower-level associates, according to The Wall Street Journal. Caster resigned as CEO the following week.

The Journal noted that in his book, How to Cure and Prevent Any Disease, Gebauer said he owned a million-dollar home, a ski boat, and a Lexus RX 300.